The share price of the FTSE 100-listed Legal & General Group PLC (GB:LGEN) gained 2.3% on Monday following a rating upgrade by Berenberg Bank. Analyst Thomas Bateman from Berenberg upgraded the rating from Hold to Buy as he believes that the macroeconomic conditions will favour the company’s shares this year. He raised his price target for LGEN stock from 258p to 289p, predicting an upside potential of 16.4%.
Legal & General Group is a financial services provider offering a wide array of products and solutions in the insurance, wealth management, savings, and investment segments.
Berenberg’s Bullish View
Legal & General shares witnessed a volatile year in 2023 due to mounting concerns regarding “credit risk and property valuations.” The stock fell about 5% in 2023.
However, Bateman believes there will be a shift in sentiment in 2024, primarily fuelled by increased confidence in the outlook for interest rates. He also expects that the company’s robust annuity volumes, driven by higher interest rates, will continue this year, which in turn will contribute to a significant increase in capital generation.
He further emphasized the stock’s potential for income investors, ranking as the seventh-highest-yielding stock on the FTSE 100 index. The stock boasts an appealing dividend yield of approximately 8%, with the possibility of further increases driven by higher capital generation. The company paid an interim dividend of 5.71p in September 2023, marking an increase from the previous year’s payment of 5.44p
Lastly, Bateman expects the new CEO, António Simões, who took up the role on January 1, 2024, to enhance capital return to shareholders, either through higher dividends or share buybacks.
Is Legal and General Stock a Good Buy?
As per the consensus rating on TipRanks, LGEN stock received a Moderate Buy rating backed by five Buys, one Hold, and one Sell recommendation. The Legal & General share price forecast is 281.57p, which is 13% higher than the current level.
